[V._Prakesh_Kainthola]_Principles_of_Hotel_Managem(BookFi)

98 Principles of Hotel Management

provided is usually in multiple units and many provide for self-
catering. The furnishing provided in the rooms is minimal. The
easy mixing of guests is encouraged by the banning of advance
booking of tables in the village restaurants. One rarely finds
oneself sitting with the same group twice.

The holiday villages are usually based on family units, each
providing a convertible living room, bath/shower and sometimes
a kitchen. The villages are self-sufficient, providing almost all
necessities required by the residents. There is also a small
shopping complex where one can buy articles of daily need. The
services of a doctor are available. The accommodation is sold
for a week or a fortnight at an all-inclusive price. In Spain and
Italy, these are classified into three categories according to the
services and amenities provided.

Time-share and Resort Condominiums : Through time-
share and condominium concepts a tourist has a unique range
of options for resort holiday and lodging. In the case of
condominiums, a tourist owns a room or a suite within a condo-
minium or hotel complex and uses the same as required by him
or it can be rented to other tourists. The owned condominiums
usually are within the complex of rooms or suites that are rented
as regular hotel or resort rooms. It is difficult of tell the difference
between an owned and a rented room.

Time-share on the other hand is a modification of
condominium ownership. The units are owned partially. The
time-share owner may own one-fifth of a unit thereby sharing
the unit’s use and costs. In some cases the owner may only
purchase a certain set of weeks to use the unit. In other cases,
a group of investors may jointly own a property through actual
deeds. The time-share title implies that the unit is shared with
others throughout the year.

Time-share began in the French Alps during the mid sixties.
However, it was in USA that the concept began to take a proper
shape. It is said that Time-share was born when distressed real

Fundamentals of Hotel Management 99

estate developers of United States in the Florida region, could
not sell their second homes in the mid-seventies and decided
to sell one apartment fifty times over for each week of the year.
Holiday time-share brings a number of benefits not only to the
buyer and developer but also to the holiday resort areas and
the traditional suppliers of services to the holiday industry.

Today, time-share owners have the choice of trading the use
of their units with others. This provides the owners a unique
opportunity to vacation at comparable prices at destinations
throughout the world. May time-share companies are available
to help time-share owners locate others interested in exchanging
units.

Time-share today has become quite popular with holiday-
makers especially with families. It offers high quality
accommodation and associated amenities ideal for repeat visitors.
It also offers better price and value than a hotel room for
extended stays and is a hedge against room rate inflation. Time-
share offers flexibility of use and a variety of experiences through
exchange options as also peripheral benefits offered through
an exchange company.

Regulation of Accommodation : Tourist accommodation
is an important component of a tourist plant. As an individual
product it is intangible, often bought in advance of its use. The
tourist at the time of making purchases thus cannot inspect or
accept or reject. Accommodation as such, raises some issues
in its development and in its marketing, both as an individual
product and as a part of a package.

It creates a need for reliable and accurate information for
both the tourists and the travel agents, and therefore, may
require supervision and control. An individual operator needs
to bring information about his accommodation to the tourist
before he sets off on his journey and also when he reaches his
destination. Similarly the tourist on the other hand, needs to
know in detail what accommodation is available at what price

100 Principles of Hotel Management

in a particular destination from which he can make a choice
about where to stay. Schemes of classification, registration and
grading of the tourist accommodation are intended to meet
these requirements.

The United Nations Conference on International Travel and
Tourism held in Rome in the year 1963 also emphasised the
need for some sort of regulation of accommodation with a view
to safeguard the interests of the users. Considering that special
attention should be given to relations between the public
authorities and the operators of tourist accommodation
facilities, the conference advocated the adoption of a hotel trade
charter codifying the regulations applicable to the hotel industry
and, in particular, giving official tourist organisations powers
enabling them to perform the activities devolving on the state
in that field.

The conference observed that many states classify tourist
hotels or are considering doing so. Acting upon the
recommendations put forward by the International Chamber of
Commerce, the conference advocated the standardisation of
methods of classification and in particular the subdivision of
hotels into five categories, each identified by a conventional sign
(stars) in conformity with the sets of standards appropriate to
different climatic conditions. The conference also considered
the question of classifying supplementary means of
accommodation such as tourist bungalows and camps.

Registration : The aim of registration is to provide a complete
list or register of tourist accommodation within a particular
definition. A registration scheme results in an inventory of
accommodation which can be kept up-to-date. In order to be
comprehensive, it normally has to have statutory legal authority
and is administered by a government authority or a statutory
body. Because of the wider range of accommodation used by
the tourists, a scheme of registration should normally cover all
forms of accommodation used by them.

Fundamentals of Hotel Management 101

Gradation : Grading separates accommodation into different
categories or grades, on the basis of judgements such as
standards of amenities and service. A grading scheme provides
qualitative judgements on the amenities and facilities of a
particular accommodation unit in a form which enables the user
to choose the quality of accommodation he requires. This may
refer to the physical facilities, food and other services of the
establishment, various amenities provided, etc. The
establishments are graded individually or collectively by way of
giving them numbers, letters or symbols.

Classification : The chief aim of classification is to maintain
standardisation of services and security for tourists. By
establishing uniform standards of classification, it is easier for
all concerned with tourism (tour operators, travel agents, tourist
enterprise and tourists themselves) to know exactly what
standard of services is offered by each hotel (according to the
number of stars) thus leading to more effective uniformity both
in statistics and in regulatory and control standards. The adopted
scheme envisages that hotel establishments are to be divided
into five categories, symbolised by stars, and based on objective
standards. The categories are assigned on the basis of two
types of requirements:

(i) minimum requirements common to all categories, as
stated in the classification scheme, concerning health,
sanitary, material and staff standards;

(ii) minimum requirements for each category, expressed as
specific conditions for the hotel (as a building), the
rooms, additional accommodation, facilities and guest
service. The classification scheme is intended as a
guide for National Tourism Administrations in their efforts
to perfect a classifications system in collaboration with
the hotel sector, on the basis of the principles set forth
in the scheme. The classification system is to be adopted
in a flexible manner so that any establishment failing to

102 Principles of Hotel Management

comply with a particular, though not fundamental
requirement, would not be downgraded provided it
complied with all other requirements.

International Hotel Association (IHA) : Founded on 18th
March, 1946 in London on the initiative of Societe Suisse des
Hoteliers, the International Hotel Association (IHA) replaced the
International Hotel Mens Association set up in June 1869 and
International Hotel Alliance set up in April 1925. The main aim
of the new association was to bring together members who
could be of mutual benefit to each other. The IHA was registered
by a French Ministerial Decree of 23 September 1949 having
its headquarters in Paris.

The priority objectives of IHA include the protection and
coordination of hotel interests in their relations with travel
agencies who often play an important intermediary role between
hotels and clients. Through the IHA/UFTAA Convention, there
is a formal codification and confirmation of international
practice governing relations between hoteliers and travel
agencies. It informs hoteliers on their rights concerning payment,
commission, cancellation, late arrival or no-show and relevant
compensations.

Membership : IHA has a membership spanning 160
countries, comprising hotels and restaurants whether chains,
both national or international, or individual establishments, who
wish to participate directly in the Associations activities, even
whilst being represented by their National Associations.

In addition, there are hotels and tourist personalities as
individual members. Affiliates like hotel schools, training centres,
tourist organisations, suppliers and services companies etc.
also participate in IHA activities. The Association today represents
more than 700,000 hotels and restaurants throughout 160
countries and more than seven million hotel industry wage
earners.

There are over 90 National Hotel Association members of

Fundamentals of Hotel Management 103

the IHA. Each Association has the right to send delegates to
vote their numbers being determined by the number of hotels
who are members of the Association in the respective country.
Independent hotels, which constitute about 80 per cent of IHA
membership, are entitled to the numerous services offered to
IHA.

All members receive a personalised membership card which
entities them to 25 per cent discount on accommodation in IHA
member hotels.

Objectives and Aims : The aims of IHA include the following:

(i) to federate National Hotel Association of all countries;

(ii) to study problems affecting the international hotel industry
and international tourist traffic including re-establishment
of free traffic, economic policy for hotels and restaurants,
hotel guides, international currency exchange, hotel
insurance and conditions of work and personnel;

(iii) to create an international employment service for
qualified hotel personnel and for the exchange of
apprentices;

(iv) to inform members of international problems concerning
hotels; and

(v) to give commercial information concerning travel
agencies.

The Structure : The association has a General Congress
which meets at least every two years, an Executive Committee
consisting of 30 members and a Council having 180 members.
The Association is headed by the President and assisted by a
Deputy President and five Vice Presidents. There is a General
Secretariat responsible for looking after administrative and
personnel matters. Planning and Finance Committee looks after
all matters pertaining to finances including membership.
Publications Committee is responsible for various publications
of the association and their distribution. In addition, the following

104 Principles of Hotel Management

Functional Committees look after various subjects of the
Association:

(a) Industry Economic Committee;

(b) Sub-Committee on Computerisation;

(c) Travel Agencies and Commercial Relations Committee;

(d) Seasonal and Resort Hotels Sub-Committee;

(e) Legal Committee; and

(f) Labour Relations and Training Committee.

One of the most important activities of IHA is, however, the
provision of a wide range of practical services for hoteliers
interested in attracting business from all over the world. The
services include the following:

Annual IHA international meetings are held where
the most pressing issues confronting the large hotel
chains”, individual hotel owners, and service and
supply companies are addressed. These meetings
provide an ideal environment in which members can
exchange valuable ideas, promote individual
properties, and discuss specific problems and
concerns of the industry.

International Hotel Guidebook : An annual listing of all
IHA members is provided to members free of charge. The guide
is an automatic sales tool: used by travel agents, hoteliers,
airlines, international corporations and business and professional
offices worldwide promoting all the properties and services
listed. Hotels & Restaurants International, a bimonthly magazine
published in the US, with a special IHA section in every issue.
This magazine keeps the industry well informed of all the activities
of the IHA, its members and councils.

International Bibliography : A publication listing books in
western languages concerning hotel-related information,
administration, proper management, hotel catering, etc. available
to members upon request.

Fundamentals of Hotel Management 105

The World Directory of Travel Agents, a valuable reference
book for hoteliers, listing 6,000 reliable travel agencies approved
by the IHA. All listed agencies must belong to their national
association, and must be in business for at least one year.

Debt Recovery Service is available to members upon request.
The IHA intervenes and assists member hotels to claim payments
overdue from foreign travel agencies.

Statistical Service on Payment Incidents, is a subscription
service offered to members. Monthly lists are provided of at
least 100 slow-paying travel agencies worldwide. Confidential
information concerning travel agents is available upon request.

International Hotel Training and Staff Placement: The
IHA brings together hoteliers and distinguished specialists in
hotel education. The IHA offers a hotel trainee network that
facilitates the mobility and coordination of hotel training worldwide.
The network also organises introductions for the placing of
upper management.

Documentation Centre: The IHA provides members with
a wide and varied range of information on the hotel and tourism
industries. For example, the IHA member may obtain lists of
hotel publications, information on public utility charges, tariffs
and all relevant hotel and industry material.

Address Labels of travel agencies worldwide are available
to members for promotion and sales use at a small fee.

IHA Membership Card: This card entitles the member to
a 25 per cent discount on accommodations in other IHA member
hotels worldwide. It encourages referral business the year round
and is a valuable sales tool in low seasons.

Accommodation Volume and Use : The number of rooms
that are available to the travelling public within lodging facilities
varies from country to country and from region to region. Within
a country most of the accommodation units will be located
where the demand for these is very big.

106 Principles of Hotel Management

The demand will be more near the location of tourist
attractions both natural or man made. Internationally the demand
for accommodation will be more pressing in the regions
which receive more tourists. Today Europe and America are the
regions which receive maximum share of world tourists and it
is here that the largest number of accommodation units are
located.

According to World Tourism Organisation (WTO) estimates,
or a survey conducted by them, the total capacity of hotels and
similar establishments like motels, boarding houses and inns
is over 20 million bed places.

The largest accommodation capacity is, however, available
in the continent Europe which is about 10 million bed places
in the hotel industry proper. This constitutes about half of the
total bed places available all over the world. The explanation
for this is that the demand for both international and domestic
tourists in Europe is maximum.

In several European countries, hotel development is
concentrated in small and medium-sized hotel constructions. In
many countries, within the framework of general expansion of
the accommodation sector, the increase in hotel accommodation
was outstripped by the increase in supplementary means of
accommodation, such as camping and caravan sites, rented
rooms, apartments, etc.

This type of accommodation has become the main provider
of lodging for domestic tourism and has also started to play a
very-significant role in international tourism. In America the total
capacity of hotels and similar establishments increased
significantly in several countries of the regions.

In East Asia and the Pacific region, several countries are
currently enjoying a hotel-building boom. In South Asia, the
countries of the region are undertaking great efforts to develop
the accommodation sector. In the Middle East, hotel construction

Fundamentals of Hotel Management 107

in the region is mainly concentrated on luxury-class hotels
intended chiefly to cater to business travellers. In view of the
high profitability, there are many hotel projects which are under
construction. In the African region, accommodation facilities are
concentrated in the northern part of the continent.

CHANGING SCENARIO

The accommodation sector has undergone substantial
changes in recent years. New developments in tourism and
transportation, changes in the organisation of travel and
technological innovations are some of the factors which are
responsible for these changes. In addition, increasing consumer
demand among tourists, due in turn to the improvement in living
standards and economic conditions, has also changed the profile
of the accommodation sector.

All the above factors seem to have influenced the structure
of the hotel industry as a whole. The tendency among middle-
income groups to take a holiday at any time of the year has
encouraged accommodation operators to offer novel kinds of
arrangements which are now available in addition to traditional
hotel accommodation.

New types of accommodation, particularly holiday villages
suitable for family-type tourists, condominiums and apartment
houses, private villas and camping facilities have proved very
successful and to a certain degree are replacing traditional
hotels and boarding houses.

These changes reflect changes in demand with new, often
younger, groups entering the international travel market and
also new approaches to the problem of providing facilities in
every competitive industry with a highly seasonal demand. The
probable future developments in the accommodation sector
were the subject of study undertaken in WTO’s research
programme. Some conclusions which emerge from the study
are as follows:

108 Principles of Hotel Management

(a) a significant growth in accommodation supply will
continue to be contributed by chain operators, including
airlines. This expansion will result mainly from the further
development of management contracts and franchise
agreements;

(b) there will be a continuing move towards the further
diversification of accommodation. The development of
budget accommodation, covering budget hotels, and
also supplementary means of accommodation, is likely
to continue as mass tourism stimulates new demands
for competitively-priced accommodation;

(c) rising building and operating costs, growing environment
and conservation pressures, as well as the need to
keep staffing levels at a minimum, will influence design
and construction of accommodation units;

(d) the standard of accommodation will continue to rise.
Demand for recreational and sporting facilities will
increase in both business and leisure accommodation;

(e) advances in technology will both influence the traditional
construction methods, for example, more frequent use
of prefabricated building techniques, as well as traditional
methods of hotel operations.

In recent times, several environmental problems have come
to be recognised in the accommodation sector. Several
environmentalists as well as users of accommodation are
demanding that environmental issues associated with
accommodation industry should be addressed properly. Tourists
visit different places of tourist interest and consume various
products they buy.

The consequences of the pressure of consumers on
tourist services results in putting pressure on the environment.
However, with few exceptions, industry owners are taking various
steps to address the environmental issue in its proper
perspective.

Fundamentals of Hotel Management 109

The various policies for the accommodation industry cover
areas like environmental protection, energy conservation, waste
reduction, emission reduction, recycling of waste, reduction of
chemical usage and awareness and education of employees
and the guests about environment.

The best possible arrangement is that the commitment for
environment should have full support of the top management
and that it should start with them. It should be an integral part
of management practice and be communicated to all personnel.
Once this is agreed, corporate policies can be implemented
through management techniques such as environmental audits.
A proper and formal monitoring system that can be adopted to
achieve the best possible results.

HOTELS AS AN INDUSTRY

Definition : “Hotel” or “Inn” is defined by British law as a
“place where a bonafide traveller can receive food and shelter,
provided he is in a position to pay for it and is in a fit condition
to be received.” Hence, a Hotel must provide food (and beverage)
and lodging to travellers on payment and has, in turn, the right
to refuse if the traveller is drunk, disorderly, unkempt, or is not
in a position to pay for the services.

Origin : The hotel industry is, perhaps, one of the oldest
commercial endeavours in the world. The first inns go back to
the sixth century B.C. and were the products of the urge to
travel, spurred by the invention of the ‘wheel’.

The earliest inns were ventures by husband and wife teams
who provided large halls for travellers to make their own beds
and sleep on the floor. They also provided modest wholesome
food, thirst-quenchers like wine, port, ale, etc. and stabling
facilities. Entertainment and recreation were provided by the
host’s wife or his wench. The entire cooking service, and
recreation was provided by the husband and wife team and his
family.

110 Principles of Hotel Management

These conditions prevailed for several hundred years. The
advent of the Industrial Revolution in England brought ideas and
progress in the business of inn-keeping. The development of
railways and steamships made travelling more prominent. The
Industrial Revolution also changed travel from social or
government travel to business travel. There was a need for quick
and clean service.

The lead in hotel-keeping was taken by the emerging nations
of Europe, especially Switzerland. It was in Europe that the birth
of an organised hotel industry took place in the shape of chalets
and small hotels which provided a variety of services and were
mainly patronised by the aristocracy of the day.

In early England, public houses were normally called “inns”
or “taverns”. Normally, the name “inn” was reserved for the finer
establishments catering to the nobility and clergy. The houses
frequented by the common man were known as “taverns”. In
France, a similar distinction was made with the finer
establishments known as “hoteleries” and the less pretentious
houses called “cabarets”.

The word “hostel” was used after the Norman invasion
derived from “host”. The “hosteler” was the head of the hostel
whereas the same position was called the “innkeeper” in England.
The word “hotel” was used in England in about 1760 after a
passage of over 80 years. In America lodging houses were
called “inn” or “coffee house”.

The real growth of the modern hotel industry took place in
the USA beginning with the opening of City Hotel in New York
in 1794. This was the first building specially erected for
hotel purposes. This eventually led to great competition
between different cities and resulted in frenzied hotel building
activity.

Some of the finest hotels of the USA were built in this era,
but the real boom in hotel building came in the early twentieth
century. This period also saw the beginning of chain operations

Fundamentals of Hotel Management 111

under the guidance of E.M. Statler. It involved big investments,
big profits and trained professionals to manage the business.

The Depression in 1930 had a disastrous effect on the hotel
industry. It was felt that the hotel would never recover; but the
outbreak of World War II brought a tremendous upsurge. This
prosperity continued through the war years into the fifties, when
two new concepts emerged:

(1) Motels,
(2) International chain operations.

While the growth of motels was restricted to the North
American continent, international chain operations spread into
all continents. Individual entrepreneurs found themselves crushed
in this race for a multi-dimensional, multi-national industry.
International chains could provide the expertise technology and
marketing thrust that individual owners could not provide.
Individual owners thus merged themselves with large
international chains such as Sheratons, Hiltons, Hyatt, Holiday
Inn, Ramada Inn, etc. These international chains provided the
following services to individual owners:

1. Partnership—sharing equity and profits.

2. Franchise—providing “name” and “association” and
marketing services in exchange for franchise and
marketing fees.

3. Management—expertise in management, professional
managers, technicians, manuals, systems, etc. on the
basis of management fees and share of profits as
“incentive” payment.

4. Marketing—active selling, chain benefits, reservation
tie-ups, etc. on payment for marketing fees and incentive
payment.

Today’s hotel caters to all the needs and wishes of a guest
and the future holds promise for a further mushrooming of
modern hotels.

112 Principles of Hotel Management

KINDS OF HOTELS

Hotels may be categorised depending upon factors such as:

1. Location
2. Number of rooms
3. Type of plan room rates that are quoted
4. Type of clientele
5. Length of guest stay
6. Facilities that it offers.

Categorisation by Locations

Downtown Hotel : It is located in the heart of the city within
a short distance of the business centre, shopping areas, theatres,
public buildings, etc. Rates in these hotels are normally high
due to their locational advantage and also due to the fact that
the rate of return on investment (ROI) computed on these
capital intensive hotels is substantially high. Normally business
clientele prefer such hotels.

Suburban Hotel : Located in the suburbs, it has the
advantage of quieter surroundings. Rates quoted are moderately
low. Such hotels are ideal for limited budget travellers and also
organisations who find the quiet setting ideal for conferences,
seminars, educational programmes, etc.

Resort Hotel : This type of hotel is located in the hills or
at beaches. It is mainly patronised by vocationers. Basic facilities
are provided and the rates offered are often on American Plan,
i.e. room plus all meals included.

Airport Hotel : As the name suggests, these hotels are
situated at the airport and are ideal for transit passengers who
have only a few hours in the city making it impossible for them
to stay in a downtown hotel. Rates are on European plan, i.e.
charges for room only.

Motel : This term is derived from the phrase, “motor hotels”,

Fundamentals of Hotel Management 113

which are located principally on highways. They provide modest
boarding and lodging to highway travellers. The length of stay
is usually overnight, thus rates quoted are on European plan.
i.e. room only.

Inns : They are smaller in size with modest board and
lodging facilities. They may be located anywhere within or outside
the city. They are the forerunners of the modern motel.

Categorisation by Number of Rooms : The capacity of
a hotel in terms of the number of rooms is a yardstick for the
categorisation of the hotel by “Size”. Hotels with 25 rooms and
less may be termed “small”; those with 25 to 100 may be called
“medium”; those with 101 to 300 are called “large”. Hotels with
over 300 rooms which are very common these days, may be
termed “very” large.

Categorisation by Type of Plan : Hotels are categorised
according to the type of plan, they offer. We thus have hotels
on European plan. American plan or Continental Plan for a
discussion of plans. These plans are decided by the hotel on
a variety of factors including type of clientele, length of stay and
average customer preference.

Categorisation by Type of Clientele : We often hear in
hotel parlance, the terms such as Group hotel, Commercial
hotel, Family hotel, etc. This categorisation is based on the type
of patronage. Group hotels cater to groups and thus their rates
would be on American Plan. Commercial hotels cater to mostly
businessmen and are on European Plan. A family hotel would
again be on American plan. Such hotels are normally situated
in resort cities.

Categorisation by Length of Guest Stay : This
categorisation of hotels further be divided into three sub-groups:

(1) Transient hotels where a guest can register for a day
or even less (airport hotels could be termed thus);

(2) Residential hotels where guests stay for a minimum

114 Principles of Hotel Management

period of one month the hotel signs a detailed lease with
the customer;

(3) Semi-residential hotels which incorporate the features
of both the transient and residential hotels.

Categorisation by Facilities the Hotel Offers : Facilities
offered by hotels may be the most important criteria for classifying
hotels. Some countries adopt the star rating system. Thus, a
five star hotel which is the highest rating will provide facilities
such as central air-conditioning, attached bathrooms with hot
and cold water, channel music, wall-to-wall carpeting, shopping
arcade, health club, swimming pool, sports facilities and a variety
of restaurants and bars including a coffee shop, speciality
restaurant, grill room, etc.

These are just some of the criteria for star rating. Certain
such facilities are denied as the star rating of the hotels goes
lower and lower. They may be excluded for a variety of reasons
such as cost, level of business, etc.

Salient Features of Management 115

3

SALIENT FEATURES OF
MANAGEMENT

Accommodation facilities constitute the most important item
in the package of facilities offered to the tourists. The success
of tourism industry depends to a great extent on the availability
and quality of accommodation facilities. Modern tourists are
becoming progressively conscious of greater comforts and
conveniences and as such comfortable accommodation is a
deciding factor for growth of tourism. The Estimates Committee
of the Lok Sabha in its report for 1975-76 has stated that “since
the hotels constitute the most important and, in fact, a basic
element of tourism infrastructure, the various measures taken
and efforts made to tourism promotion will not produce the
desired results if the hotel accommodation in the country lags
behind.” “Accommodation facilities are the places where tourists
stop (cease to be) travellers and become guests. The level of
guest satisfaction achieved by an area’s accommodation facilities
will, in a large measure, determine the total success of the
tourism programme.”

116 Principles of Hotel Management

NUMEROUS TYPES

Accommodation facilities can be of many types, viz., hotels,
motels, inns, guest houses, private hotels, establishments with
bed and breakfast only, holiday camps, holiday and conference
centres, paying guest accommodations, choultries, youth hostels,
etc. Among them hotels are the most important. Almost all
foreign tourists stay in some hotel or the other. The other types
of accommodation are mainly used by the domestic tourists in
addition to hotels. An attempt was made during the enquiry to
find out the relative importance of these different types of
accommodation for the domestic tourists.

It could be seen from the table that out of 500 respondents,
323 (65%) used hotels, 134 (27%) choultries, 75 (15%) stayed
with friends and relatives, and so on. Hotels being the most
important type of accommodation, a large number of tourists
use them. Next to hotels, come choultries because they are free
or cheap. Till recently most of the pilgrim centres in India had
only public choultries meant for the devotees. Now the situation
has changed. The concerned authorities are providing fairly
comfortable paid accommodation, which is mainly meant for the
masses. A survey conducted by the Indian Statistical Institute
in 1982-83 revealed that 76.8% of foreign tourists preferred
hotels. The relevant figures for youth hostels, host family
accommodation, rent-free places and other categories were
4.3%, 12.5%, 1.5% and 4.8%.

As majority of the foreign tourists and about 65% of the
domestic tourists, as seen above, use hotels, this class of
accommodation is studied in detail.

CLASSIFICATION OF FEASIBILITIES

With a view to maintaining standards and enforcing control,
the Department of Tourism, Ministry of Tourism and Civil Aviation,
Government of India, has a system of categorising the available
accommodation as per certain criteria. Accordingly, the hotels

Salient Features of Management 117

could be either approved or unapproved. When a hotel comes
in the approved list it presupposes that it is of international
standard. Normally a foreign tourist would prefer only an approved
hotel because it has the stamp of official recognition. This is an
important aspect as far as a hotel is concerned because approval
itself is sufficient advertisement. So though not at the initial
stages, all the hotels above a particular standard try hard to get
this recognition at least in due course. Most of the new hotels
constructed as per standards stipulated by the Government
automatically come in the approved list. The classification of
hotels as per the above stipulations came into effect from 1963
and consequently data on hotels as per the classification are
available from that year.

The number of approved hotels and the rooms therein are
given for a period of time. It could be noted from the table that
the number of approved hotels which stood at 186 in 1963 had
come down to 166 in 1968 and to 152 in 1971 and steadily
increased thereafter. It is not clear how the number of hotels
could come down. The Hotel Review and Survey Committee,
1968, has also noted the reduction in the number of hotels but
no explanation is given for the reduction. Perhaps it may be due
to closure or sometimes due to derecognition. Yet another
possible reason for the decrease could be that there might have
been differences in the criteria adopted for approval over the
years due to changing circumstances. However, there has been
continuous increase in the number of hotel rooms. It has risen
from 7,085 in 1963 to 29,332 in 1982 as seen from the table.

Over the period, the number of hotels has doubled and that
of rooms more than trebled. This high rate of growth is certainly
attributed to the patronage given by the Government in terms
of some tax incentives and the creation of a Hotel Development
Fund in 1968. During the recent years, 1978-1982, by and large
the growth rates are lower, both in the number of hotels and
in rooms in absolute terms. According to the Federation of Hotel
and Restaurant Associations of India (FHRAI), this trend is

118 Principles of Hotel Management

attributed to reduced incentives. It may be added that during
1982-83 there has been considerable increase in hotel capacity
particularly due to the construction of many large hotels on the
eve of the Asiad.

It would be ideal if the rate of growth in hotel capacity keeps
pace with the rate of growth of tourist arrivals especially when
the existing hotel infrastructure is not sufficient. Data reveals
that during 1963-82, the increase in the number of hotels and
rooms was about 100% and 300%. As against this, the increase
in foreign tourist arrivals was 500% during the same period. This
shows the wide gap between the demand for and supply of
hotels.

It could be seen that throughout the period in question,
there has been shortfall in hotel accommodation, which has
been very acute since mid-1970s. However, by 1985, the gap
between the demand for and supply of hotels, on the basis of
projected room capacity and tourist arrivals is likely to be
completely wiped out.

1. The foreign tourists stay in hotels for about 70% of the
time of their stay in the country. (This percentage is
worked out from ‘statistical evidence that the average
stay is 14 days, of which 10 are in hotels.’) But, according
to published evidence, the average stay of foreign tourists
in India works out to 33 days in 1963, 20 days in 1968
and about 25 days each for the subsequent years.
Hence, for the purpose of calculating the hotel
requirement, the average stay is taken as 25 days
throughout. With the assumed 70% stay in hotels the
number of days of stay in hotels per tourist works out
to 18 days.

2. The foreign tourist arrivals in a year is taken to be 1,000.
Then the total visitor-days (foreign) for which hotel
accommodation is needed works out to (1,000 x 18)
18,000.

Salient Features of Management 119

3. It is estimated that ‘the ratio of foreign to Indian guests
in 5 star hotels is 73 : 27’. In respect of other approved
hotels, this ratio is likely to be lower. The survey of
tourists given in data would reveal that the ratio of
foreign tourists to domestic tourists staying in luxury
class and medium class hotels is 249 : 164—roughly
3 : 2. We have already seen the hotel requirement for
the foreign tourists alone to be 18,000. Then the total
requirement of hotel accommodation would be
(18000 x 5/3) 30,000 visitor days. It would mean that
when 18,000 beds are needed for 1,000 foreign tourists,
another 12,000 beds have to be provided for the domestic
tourists.

4. Normally the occupancy in approved hotels as would
be seen later is 72%. If that is so, the total number of

beds to be provided would be = 41,660 in

a year.

This works out to 114 beds per day.

5. From a sample of 50 hotels, the room-bed ratio is
calculated for finding out the hotel room requirement for
the 114 beds. The ratio works out to 1: 1.87. From this
ratio it could be found that for 114 beds 60 rooms are
required. Taking the foreign tourist arrivals for different
years, the requirement of rooms is worked out for these
years. The researcher is aware of the limitations in this
calculation, namely, the room-bed ratio may not be truly
representative for all the hotels and for all the years.

6. The estimate is conservative as we have assumed uni-
form demand pattern which is not very realistic.

The available figures in would give the impression that a
large number of the tourists did not have any accommodation.
But it is not so. Such of those who did not get accommodation
in these (approved) hotels would have gone to the unapproved

120 Principles of Hotel Management

hotels which are not included in the above analysis. While
analysing the occupancy ratio, it would be seen that some of
the hotels have an occupancy ratio well exceeding the average
and it is learnt that in some hotels, which are not covered in
the survey, the occupancy ratio is over 100%. This indicates that
some of the rooms would have been let out to more than one
customer during the day depending on the time of checking out
or in extraordinary cases extra beds would have been provided.

In addition to the approved hotels, there are a large number
of unapproved hotels. There are as many as 324 such hotels
(as per the Hotel and Restaurant Guide: India, 1983). Perhaps,
the figure would be even more as the Hotel and Restaurant
Guide includes only those hotels which are members of either
the FHRAI or/and the regional hotel and restaurant associations.
One would think that these hotels are substandard in terms of
facilities and comfort. But they are not and in fact some of them
are awaiting approval by the Department of Tourism. On enquiry
it was found that their applications for recognition are pending
with the Government. Their recognition is a question of
administrative procedures and consequent delay and not one
of quality of these hotels. “According to Government sources,
applications for star classification from 171 hotels are still awaiting
clearance with a room capacity of 14,003.”

Even foreign tourists, who normally prefer approved hotels,
stay in these hotels as “many of these hotels are clean and
those who spend money from their own pockets naturally prefer
inexpensive accommodation”. ' That is to say, inexpensiveness
coupled with comparatively good services and facilities makes
these hotels suitable for the middle income and low income
classes of tourists—foreign and domestic. As seen already, all
along the shortfall in the approved category of hotels has been
partly met by these unapproved hotels. Hence while taking an
inventory of hotels, it would be realistic to include these hotels
also.

Salient Features of Management 121

Many hotels are under construction or on expansion. “The
Ministry of Tourism and Civil Aviation has approved another 205
hotel projects which are in various stages of completion with
a room capacity of about 16,765”. In Delhi alone 12 new hotels
were under construction with an envisaged capacity of 4,358
rooms. Of these about 2,500 rooms were completed in 1982.
The pace of construction is beset with many problems like lack
of infrastructural facilities and essential inputs and inevitable
bureaucracy.

By the next year, when all on-going projects would be
completed, there will be about 60,100 hotels rooms, calculated
as under.

Approved hotel rooms 29,332

Unapproved hotel rooms 14,003
(Awaiting classification)

Hotels under construction—expected to be 16,765
ready by next year

Total 60,100

These projected 60,100 hotel rooms would be just sufficient
to meet the demand, at the rate of 60 rooms per 1,000 tourists,
for about one million expected foreign tourists. (As noted earlier,
the projected demand for hotels include an appropriate fraction
of the domestic sector also.)

“The criteria for classification have been set by the Depart-
ment of Tourism and include everything from the size of the
room to qualifications of the staff. Initially hotels are classified
into 1 star, 2 star, 3 star, 4 star and 5 star. Recently yet another
class, namely 5 star deluxe, is added. 1 and 2 star hotels may
be referred to as economy class used by budget tourists. 3 and
4 star hotels are referred to as middle class hotels and 5 star
and 5 star deluxe hotels obviously come under luxury class.

It could be seen that 2 star hotels outnumber the other

122 Principles of Hotel Management

hotels throughout. Next comes the 3 star hotels followed by 1
star. The number of 5 star and 5 star deluxe hotels lagged
behind the 4 star hotels till 1979. From 1980 the same rose up.
But in respect of growth, 1 star hotels have reduced in number,
while the growth rate of 2 star hotels is not steady. Perhaps
these could have been upgraded consequent on improved facili-
ties. Regarding the rest, there has been significant growth though
not uniform. During the 22 year period, the number of 5 star
hotels has increased by 586%, 4 star hotel by 158% and 3 star
hotels by 208%. The growth in hotel rooms as against the
number of hotels would give a more realistic picture. It could
be seen from the table that the number of rooms in 5 star hotels
has increased faster than that of the other classes of hotels,
followed by 3, 2 and 4 star hotels.

A considerable hotel capacity is in the unclassified category
of hotels. In fact about 50% of the approved hotels and rooms
during 1978-80 remained unclassified. It only signifies the
inordinate delay in getting a hotel classified. A hotelier is anx-
ious to get his hotel approved and classified as quickly as
possible. It would be in the best interest of the hostelers, if this
could be expedited. Things have started moving in this direction.
The unclassified hotel capacity is reduced to 30% by 1984 from
50% in 1978-80.

At this stage it would be of interest to study the user pattern
of the different classes of hotels. It could be noted that fewer
tourists use luxury class hotels compared to medium class and
economy class hotels. Only 10% of the foreign tourists use
luxury hotels while about 40 and 70% of them use medium and
economy classes of hotels respectively. Out of the 500 domestic
tourists interviewed, only 343 used hotels of one class or the
other. Of these 343, only 17 used luxury class hotels, 157
medium class hotels and 310 economy class hotels. Evidently,
it could be concluded from the above, that both foreign and
domestic tourists mostly favour the medium and economy class
hotels. Hence the need for more of these hotels. But presently

Salient Features of Management 123

over 30% of the hotel rooms are in the luxury hotels. However
these luxury hotels are not mainly intended for the tourists. In
fact their clientele are mostly from the business and Government.

Supply of and demand for each class of hotels cannot be
equated. Yet, the study of the extent of the tourists getting the
class of hotels of their choice would indicate the gap. As, per
data the availability of different types of hotels as stated by the
foreign tourists is given. (This study is not extended to domestic
tourists.)

Out of 48 tourists who used luxury class hotels, 42 (85%)
could get this particular accommodation in most cases as
indicated by a high percentage of availability, namely 60-100%.
Similarly 75% of the tourists who used medium class hotels and
70% of the tourists who used the economy class hotels were
able to get the particular class of hotels of their choice to the
extent of 60-100%. Such of those who do not get hotels of their
choice would naturally go in for other classes of hotels within
their reach. From the table it could be seen that the demand
for middle and economy classes of hotels is more than the
supply, indicating the need for more of such hotels.

The availability of hotel accommodation in terms of number
of hotels or rooms is an important factor in the context of tourism
development. Equally important is their geographical location/
physical distribution. But there cannot be any hard and fast rule
in this regard because normally hotels come up at places of
demand and it is not realistic to expect equal distribution.
However, it would be of some interest to study the existing
position in India regarding the regional distribution and
concentration of hotels in metropolitan cities.

The Federation of Hotel and Restaurant Associations of
India (FHRAI) has divided the country into 4 regions
geographically, viz., northern region covering Delhi, Uttar
Pradesh, Rajasthan and all other northern States; Calcutta
region covering Orissa, West Bengal, Bihar and other eastern

124 Principles of Hotel Management

States and eastern Union Territories including Andaman and
Nicobar Islands; western region covering Maharashtra, Gujarat,
Madhya Pradesh and Goa, Diu and Daman; and southern region
covering Andhra Pradesh, Karnataka, Tamil Nadu and Kerala,
and the Union Territory of Pondicherry.

The more conspicuous aspects seen from the table may be
highlighted here. The regional distribution of the approved hotels
is lopsided with 119 hotels in the southern region, 111 in the
northern region, 99 in the western region and 41 in the Calcutta
region. This would give the impression that Calcutta region is
very much lagging behind compared to other regions. This is
so because most of the areas included in the Calcutta region,
particularly Assam, Tripura, etc., are not conducive for
development of infrastructural facilities. Besides there would not
be enough demand for accommodation in these areas due to
non-accessibility. Even basic transport facilities are being
developed only now. Such developments supplemented by the
extension of Vayudoot services to this region would improve the
tourist flow into the region.

The southern and northern regions are better placed than
the other regions in regard to hotel infrastructure. This incidentally
reflects the relatively more and increased tourist traffic in these
regions. The situation with reference to the northern region
would be slightly better when the 12 large new hotels constructed
in connection with the Asiad are also taken into account. The
position is not much different with reference to the unapproved
hotels.

As regards the star-wise distribution of hotels, the northern
region stands first in terms of number of all categories of star
hotels. With respect to 1, 2 and 3 star hotels, the northern region
is followed by the southern region, western region and Calcutta
region. On the other hand, the relative position of the regions
is different in respect of 4, 5 and 5 star deluxe hotels. Here the
northern region is followed by the western region, southern
region and Calcutta region.

Salient Features of Management 125

It is of interest to note that the southern region with the
largest number of approved hotels occupies 2nd place with
regard to 1, 2 and 3 star hotels and 3rd place in respect of the
other star hotels. This is partially explained by the fact that
almost 50% of the approved hotels in the region are yet to be
classified. Similar is the situation with regard to the Calcutta and
western regions also. Perhaps when the classification process
is complete, the star-wise distribution of hotels would be different.
It also emerges from the study that there is a case for speedier
classification of hotels, once they are approved. In respect of
unapproved hotels the pattern of distribution is the same.

The distribution of approved hotels in the major 4 metro
cities, namely, Delhi, Calcutta, Bombay and Madras, reveals
that out of a total of 128, 37 are in Delhi, 12 in Calcutta, 50
in Bombay and 29 in Madras. The relative position of the 4 cities
with reference to the unapproved hotels is more or less the
same. A casual look at the distribution of hotels in these four
cities vis-a-vis their respective regions reveals that 33% of the
approved hotels and 30% of the unapproved hotels in the
northern region are in Delhi alone. The corresponding figures
for Calcutta work out to 29% for both approved and unapproved
hotels. Bombay accounts for 50% of approved hotels and 53%
of the unapproved hotels of the western region. In the case of
the southern region 29% of approved hotels and 9% of
unapproved hotels are in Madras. These figures speak of the
degree of concentration of hotels in these four cities. This situation
should not be explained away by saying that these cities are
predominant. The point of interest is that there are other cities
in the different regions, but they have not grown as big as the
metro cities though most of them have fairly known for the
tourist attractions. So a case may be made for extra effort to
decentralise the hotels in the less developed cities in the
respective regions.

It is of significance to study the position of Tamil Nadu in
this context. From the table it could be seen that there are 48

126 Principles of Hotel Management

approved hotels, including 23 star hotels and 25 unclassified
ones. In other words, 13% of the approved hotels in India and
40% of the approved hotels in the southern region are in Tamil
Nadu. These figures are quite encouraging as far as Tamil Nadu
is concerned. This is partly due to locational advantage as the
major city in the southern region, viz., Madras, is in Tamil Nadu.
This natural advantage is supplemented by the more encouraging
steps taken by the Government to develop tourism.

The study is further extended with reference to total number
of rooms in the four major cities to give yet another dimension
to the analysis. It could be seen from data that in respect of
the rooms in approved hotels, Bombay stands first with 4,054,
followed by Delhi with 3,875, Madras with 2,032 and Calcutta
with 1,135 rooms. It may be noted that over 50% of the rooms
in the approved hotels are in these four cities, though in terms
of number of hotels, these four cities together account for only
about 35% of the total number of approved hotels.

It is not intended here to make out a case for equitable
distribution of hotels in the different regions/cities or creation of
hotels standardised capacity. The differences are bound to exist.
This pattern of distribution of hotels would change in due course
with the changing emphasis and with the development of new
and more tourism centres.

It is of academic interest to know the ownership pattern of
hotels. This is studied with reference to 364 hotels, both approved
and unapproved, taken at random from 16 cities/tourist centres
with eight or more approved hotels each according to the Hotel
and Restaurant Guide, 1983. The data are presented data.

It could be noted from the table that out of 210 approved
hotels with 19,801 rooms, 24 hotels with 941 rooms are owned
by sole trading concerns, 40 hotels with 2,221 rooms by
partnership concerns, 80 hotels with 5,444 rooms by private
limited companies and 60 hotels with 10,678 rooms by public
limited companies.

Salient Features of Management 127

It is of significance to note that a large number of luxury
hotels are owned by corporate undertakings while a few such
hotels are owned by the non-corporate sector. In the case of
3 star and the luxury class hotels the corporate sector owns
60 while the non-corporate sector owns only 16. Out of the 12
one star hotels 3 each are owned by partnership and sole-
tradership concerns, 5 by private limited companies and 1 by
public limited company. The non-corporate sector owns 20 two
star hotels while the corporate sector owns only 11 such hotels.

In terms of rooms, out of 25,325 (approved and unapproved
taken together) 10,768 are owned by public limited companies,
6,170 by private limited companies, 5,165 by partnership and
2,123 by sole tradership. In a nutshell, in respect of approved
hotels corporate sector claims a major share. In the case of
unapproved hotels the non-corporate sector predominates.

This position is not due to any special treatment to the
corporate sector in the matter of granting approval, but due to
the fact that the corporate sector by and large are financially
well off, construct hotels according to standards and stipulations
for the grant of approval, while the hotels in the non-corporate
sector usually are not of international standards, perhaps due
to less favourable financial position.

Number of rooms per hotel is taken as the measure of size.
Size of hotel depends on a host of factors such as location,
class and ownership of the hotel and so on. A hotel in a
metropolitan city would normally be big. Similarly higher the
‘star’ of the hotel, bigger is the size. Further, eventually hotels
owned by corporate undertakings tend to be big while those
owned by non-corporate undertakings tend to be small as
mentioned earlier.

The average size of hotels in Bombay, Calcutta, Delhi and
Madras and the all-India average are given. It could be seen
that the average size of hotels in these four cities is comfortably
higher than the all-India average. The table (last column) also

128 Principles of Hotel Management

gives the average size of hotels, star-wise. It could be seen that
the average size of 5 star hotels works out to 240 rooms, 4 star
hotels to 81 rooms, 3 star hotels to 52 rooms, 2 star hotels to
42 rooms and 1 star hotels to 33 rooms. Average size of
unclassified hotels works out to 55 rooms. The Hotel Review
and Survey Committee reported that the average size of hotels
star-wise was 170, 72, 46, 36 and 31 rooms for 5, 4, 3, 2 and
1 star hotels respectively in 1968. Over the years there has
been significant growth in the average size of 5 star hotels, i.e.,
from 170 rooms in 1968 to 240 rooms in October 1982. In the
case of other classes of hotels also the size has increased but
only marginally.

It could be seen that by and large, hotels owned by
soletraderships are small in size compared to others. The average
size of approved hotels owned by sole tradership is the lowest
with 39 rooms per hotel and is the highest for those owned by
public limited companies with 178 rooms. In the case of
partnership and private limited companies the average size
works out to 55 and 68 rooms respectively.

The average size of hotels, all hotels approved and
unapproved taken together, given in the last column reveals that
the hotels owned by the public limited companies are the biggest
with an average of 174 rooms per hotel. This figure is roughly
3 times, 4 times and 5 times the average size of hotels owned
by private limited companies, partnership and soletradership.

Fixing the hotel tariff is just like pricing any product or
service. It is beset with many problems. The price should be
affordable to the public and remunerative to the owners. In the
case of hotel industry, the problem of price fixation is more
pronounced because of the highly perishable nature of its ser-
vice, seasonal spurt and slag in the demand and unadjustability
of supply to demand in the short run. Further, the cost of
construction, operating cost, locational factors, the degree of
competition, etc., are also to be considered.

Salient Features of Management 129

It is said that room tariff normally is not determined by
market forces of supply and demand. It is true that tariff quoted
by the hotels concerned has to be approved by the Department
of Tourism. “But practically every year early in September hoteliers
represent to the Department of Tourism for a 10 to 15% increase
in their room tariff. Their applications are rubber stamped by the
Department and hotel charges go up annually in early October.”
Why should this be approved? The Department cannot act
otherwise. The hoteliers have a better bargaining power because
of sellers market prevailing in this industry due to the heavy
shortage in hotel capacity.

But, if the market conditions change the pricing mechanism
also would change. What has been happening in New Delhi
since the Asiad is an example in question. To meet the antici-
pated short-term increase in demand on account of the Asiad,
as many as 12 new and large hotels were constructed. But the
anticipated increase in demand did not materialise. The sudden
increase in the hotel capacity has changed the market condition
from sellers market to buyers market. Many hotels are now
selling rooms at cut rates. “Some of them like Samrat of the
ITDC Chain have officially announced off-season discounts of
30% but others are doing so under the counter. Two of Delhi’s
posh hotels are selling rooms to single occupants for as little
as Rs. 300 against the listed tariff of Rs. 750 or Rs. 775.” This
may be an isolated instance but it certainly proves the point that
market forces have a definite say in price fixation, apart from
regulatory measures by the Government .

The room tariff quoted by the different hotels are normally
for a day. Some hotels take 24 hours’ stay as a day while in
others there is a particular check-out time, usually 12.00 noon.
The latter practice is certainly against the interests of the inmates.
The hoteliers may have their own good reasons. However, it
may be suggested that the Government would do well if it tries
to maintain uniform and standardised procedure in all hotels.
Incidentally this would create a better goodwill among the tourists.

130 Principles of Hotel Management

It may be added that the hoteliers are seized of this matter and
have made a beginning in this direction.

The room tariff are of three types, namely, the American,
plan, Modified American plan and European plan. “American
plan includes three full meals and room. Modified American plan
includes the price of the room, breakfast and dinner. No meals
are included in room rates under the European plan.” The
European plan is adopted in most of the unapproved hotels in
India. In the case of a sample of 50 approved hotels, 20 offer
all the three plans, 15 offer European plan only and the rest
either the American plan and/or the Modified American plan.

These different plans are good as far as they go but in
passing it may be mentioned that it would be better if the tourists
are given the freedom to eat anywhere they like. The American
plan and the Modified American plan give the impression that
there is an element of compulsion attached to them. This should
be avoided. However, in practice almost all the tourists eat from
where they stay unless they are on the move.

It is important to give the freedom to the tourists because
invariably most of them will be on the move on sightseeing
during day time and it would be too much to expect them to
come back for their noon-meal and sometimes even for the
supper. Perhaps there would be some valid reasons from
the point of view of the hoteliers, because they should have
an assured demand to justify their investment in the
restaurant section of the hotel which is not usually frequented
by the general public as much as in the case of economy class
hotels.

A comparison of room rates in India with those in other
countries shall help in assessing the competitiveness of Indian
hotels. In the case of deluxe hotels, Indian rates are the lowest.
In the case of 1st class hotels Indian rates are the second
lowest, the lowest being that of Colombo. Again ours are the
lowest in respect of standard hotel rates and of the economy

Salient Features of Management 131

class. This is confirmed from the survey. It was found that 385
out of 500 tourists have opined that Indian tariff is relatively
lower their own countries. About 80 have stated that the tariff
is equal to theirs while about 35 stated that the tariff is higher
than theirs. It could be concluded from the above that Indian
hotel tariff, by and large, is lower. This is a favourable factor and
could be effectively used as a promotional incentive. But care
must be taken to see that we are not underquoting ourselves.
In our eagerness to earn foreign exchange, are we in effect
attracting and subsidising the middle and low income foreign
tourists at the expense of our own people? It may be suggested
that there should be a more pragmatic and realistic approach
to the tariff policy.

There may be a temptation to quote lower rates thinking that
it will attract more custom but in all probability it will create a
psychological feeling among the international tourists that Indian
hotels are of a lower standard. They may not appreciate a lower
rate for better comforts and services and so as a matter of
caution it is necessary to keep a watch on the tariff movements
elsewhere and try to keep pace with them. It may be added that
the above line of argument/suggestion has been made with
respect to tariff prevailing in hotels which are frequented by
foreign tourists, who are mostly relatively affluent. As regards
the tariff in hotels frequented by domestic tourists, especially
the middle and low income group, the need for lower and
cheaper rates can rarely be overemphasised.

Apart from the listed tariff, some hotels charge sales tax,
luxury tax, service charge, etc. There is no uniform code or
procedure. These charges and taxes also vary from hotel to
hotel. It is officially stated that in hotels which charge service
charges, tipping is prohibited. But in practice how effectively this
prohibition is done is anybody’s guess. In this context, it is
suggested that efforts should be made to standardise the
procedure and practice with respect to these sundry charges.
With the practice there is a psychological inhibition in the minds

132 Principles of Hotel Management

of the tourists that they are fleeced. An all-inclusive rate would
certainly create better goodwill and confidence.

The user psychology and behaviour should always be kept
in mind in tariff fixation. There are tourists who are extremely
sensitive to price levels and for them reduced rates would be
a stimulant. Yet reduction in tariff must be very cautiously done
so that it does not lead to customer suspecting the quality of
the hotel. Another category of tourists are willing to pay for
quality though price remains the important factor. The third
category is the luxury group tourists. “Service has traditionally
been a distinguishing, often famous, feature of the hotel.
Customers from high income brackets are attracted by the
comfort and status of such establishments. Price must be used
to reinforce this image rather as a competitive device. These
are ‘status symbols’ for their guests; then they have to ensure
that they remain one of the most ‘expensive’ hotels.” That is to
say that high tariff sometimes will be a stimulant for the luxury
class tourists as much as low tariff will be for budget class
tourists. This is an important point to be borne in mind in making
tariff policy decisions.

In passing it may be highlighted that there is need for
providing enough physical comforts and services commensu-
rate with the tariff. It is seen from the survey that out of 235
foreign tourists staying in star hotels, 152 have stated that the
tariff is commensurate with the services rendered. The rest felt
that though there are enough physical comforts, the services
provided are not satisfactory. This certainly points out that there
is greater need for trained personnel at various counters.

By occupancy ratio is meant the ratio between ‘sold rooms’
and ‘installed rooms’. It means the extent of utilisation of hotel
capacity. Hence higher occupancy ratios would mean greater
utilisation and vice-versa. An unduly high occupancy ratio would
indicate a short supply of rooms. Hotel industry on the whole
with its ‘perishable product’ and diverse demand pattern due to

Salient Features of Management 133

time and locational factors cannot hope for 100% occupancy
of all its units at all times. There are bound to be differences
in occupancy ratios of different hotels for obvious reasons.
Hence a study of the occupancy ratio for different types of hotels
would help in ascertaining the extent of utilisation of hotel
infrastructure and also in deciding upon the priority to be adopted
in the development of different classes of hotels.

The all-India average occupancy ratios for different categories
of approved hotels are recorded for five years for which complete
data are available. It could be seen from the table that the
occupancy ratios over the years have come down for almost
all classes of hotels, with the exception of 2 star hotels. (No
satisfactory explanation can be ascribed to the increase in the
occupancy ratio of 2 star hotels. It may be quite accidental.) The
average occupancy ratio for all hotels taken together has
decreased from 75.8% in 1978 to 70.2% in 1982 and to 64.2%
in 1983 and 65.5% in 1984.

The decrease could be attributed to increase in total capacity
without corresponding increase in demand. In the four-year
period the increase in foreign tourist arrivals is only 15% while
the number of rooms in approved hotels has increased by 34%.
Category-wise the occupancy ratio for 5 star hotels has come
down from 87.3% in 1978 to 79% in 1982 and to 66.6% in 1984.
The decrease in occupancy ratio of the 5 star hotels is the
steepest. This could be due to substantial increase in the number
of rooms, to the tune of about 170%. Considering this increased
capacity, the decrease in occupancy ratio is only marginal.
Similar trend is found in other classes of hotels too. In respect
of unclassified hotels there is decrease in both the number of
rooms and in occupancy ratio, the latter decreasing steeply. One
possible reason for this steep decrease could be that most of
such hotels when compared to the star hotels are in places
other than the 4 major metropolitan cities where the demand
for hotels is comparatively less. It could be seen that out of the
28 unclassified hotels in the northern region only 2 are in Delhi,

134 Principles of Hotel Management

of the 19 in Calcutta region only 5 are in Calcutta, of the 45
in western region only 17 are in Bombay and of the 59 in
southern region only 10 are in Madras.

Now certain questions pose themselves. Whether the present
occupancy ratio is normal or otherwise? Whether new hotels
should be commissioned or not? If yes, what class(es) hotels
are to be commissioned?

Whether the present occupancy ratio is normal or not is a
matter of opinion. All approved hotels in India fix room rates
according to the modified Hubbert formula. Accordingly, the
excess of their operating expenses over income from other
sources (restaurant, etc.) has to be recovered from room income,
at 60% occupancy ratio. Normally a hotel with 60% occupancy
ratio would break even. The approved hotels have 65%
occupancy ratio which is certainly very encouraging.

Since the demand for hotel rooms has always been on the
increase, more hotels are to be developed. In doing so it should
be remembered that foreign tourists prefer medium class hotels
and domestic tourists prefer economy class hotels. That means
emphasis should be laid on 3, 2, and 1 star hotels and economy
hotels like the Janata hotels.

Accessibility refers to the relative location of a hotel with
respect to the nearest city proper, railway station, bus stand,
airport, etc. Normally, except the airport, all other important
places, including trade centres, bus stand and railway station,
are within the city. Till very recently it was thought that hotels
should necessarily be within the city proper or as near as
possible to the places of activity. That is why almost all the
hotels, except the new ones, are located within the city proper.
On an analysis of the physical location of 100 hotels, both
approved and unapproved. It was found that 94 hotels were
within a distance of 10 km from the downtown area, 89 hotels
were within 10 km from the nearest railway station and 91 hotels
were within 40 km from the nearest airport. 10 km to the railway

Salient Features of Management 135

station/downtown or 40 km to the airport should be considered
normal. Now it is clear that the already established hotels are
very much within the city complex. Some of them are located
even in the most congested and uncomfortable places.

Of late the trend is changing, perhaps not out of choice but
out of necessity. Sufficient and convenient land for a new hotel
within a city is almost a luxury today. From the tourists point
of view, perhaps they will like to have sprawling hotel complex
far away from the polluted, noisy and sometimes maddening
atmosphere. They will like to have a comfortable hotel with clean
and fresh air, extensive gardens, lawns, natural setting, etc. All
these could be relatively easily provided if new hotels are located
away from the already congested cities. This would initially
appear to be an unwise proposition with respect to ‘sales’. But
with the improved transport and communication facilities and
established ‘brand image’ proximity of hotels to the heart of the
city has only limited significance.

The latest thinking on this aspect is the establishment of
hotels in semi-urban and rural pockets. “Land is fairly cheap in
non-metropolitan areas, so hotels can be built out; they don’t
have to be built up. Natural light, ventilation and renewable
sources of energy can be tapped far more effectively out in the
country than they can be in towns. Further such settings lend
themselves to the village-hamlet atmosphere, thus attracting
domestic tourism from the cities. So if these complexes are
effectively planned, they can have a built-in flexibility, responding
to quick changing tourist patterns, catering to a wide cross-
section of travellers.” Such a hotel is referred to as condominium
hotel or shortly ‘contel.’

Experts consider that there is enough and more scope for
‘contels’ in India. But the practitioners must be convinced about
the new concept. A beginning in this respect is already on the
anvil. It is held that with the introduction of travel circuits to
develop tourism in a most integrated manner, major hotel chains

136 Principles of Hotel Management

are thinking in terms of setting up their units at strategic halts
so that the groups travelling under their sponsorship could be
easily accommodated in their own ‘net.’ In this regard, the Tamil
Nadu Tourism Development Corporation has a place of pride,
in the sense that most of its hotels are located en route of its
weekly conducted coach tours, providing accommodation to its
clientele under one roof and at the same time getting an assured
business. Thus the ‘contel’ concept is basically a strategic
marketing technic. It is held that ‘contel’ could rectify the
imbalances in hotel industry like too much concentration, too
many luxury class hotels, too many large-sized hotels, etc.

Hotels provide a vast range of services and facilities. Though
originally conceived as a place where a temporary sojourn is
provided, over the years the basic feature of a hotel has changed
very much. With the emergence of status-symbol consciousness,
hoteliers started playing to the expectations of the public by
providing a variety of facilities, some of which are highly
sophisticated. The facilities provided by the chosen approved
and unapproved hotels are given.

It could be seen from the table that as many as 35 distinctive
facilities are provided by hotels apart from accommodation. To
ensure competitiveness and to meet the user demands, hoteliers
have added a host of services to the ‘basket’ they sell.

Most of the approved hotels offer varieties of facilities
compared to the unapproved hotels. Precisely that is why these
hotels come under the approved category. However, in certain
respects the hotels have to gear up their services such as own
transport facilities, tour arrangements, etc., for the benefit of the
tourists. To meet the increasing demand of the business tourists,
secretarial and similar services need to be extensively provided.

Normally one would think that this is the way it should be,
but there are strong views against this kind of tendency of
providing a host of ancillary services. The travel writers, Hugh
and Collen Ganzter, opine that “A hotel is a hotel. It is not a

Salient Features of Management 137

restaurant... not a shopping arcade... not a health club, beauty
parlour, office centre or convention hall. In other words, we must
return to the concept of a hotel as an inn, a hostel and a lodge...
Hotels have been forced to engage numerous specialist
organisations under their umbrella because their status-con-
scious guests wanted to be cossetted. That age is passing fast.”

However, from what we see around us with respect to the
nature and varieties of facilities provided by most of the modern
hotels and also the attitude of the so-called elite tourists, it is
doubtful whether such change would set in so sooner what is
important is the attitude of the tourists and guests and not that
of the hoteliers. The possible extent of change in the attitude
of the tourists is anybody’s guess. After all money increases the
craze for luxury. Businessman would cash such human nature.

It is but natural that in the case of industries dealing directly
with people, there would certainly be complaints by the users
as to the quality, range and price of facilities and services
rendered. The industry should welcome users’ complaints and
suggestions and try to do the maximum to eliminate their
recurrence.

An attempt was made to ascertain the broad areas of users’
(foreign tourists) complaints about hotels in the country. It could
be seen that poor maintenance of even available facilities was
the major complaint followed by poor sanitation, lack of sufficient
physical facilities and the like.

Most of these complaints are real. A day’s stay in a hotel
would reveal how poorly the installed facilities are maintained.
The shortcomings of Hotel. The hoteliers would do well to
bestow more attention to the areas of major complaints.

BETTER QUALITY

The essence of the long run success of any economically
based enterprise is its ability to survive and prosper, which
ultimately depends upon its net profitability. The main items

138 Principles of Hotel Management

provided by a hotel are rooms, food and beverages and services.
The most important among this set is the service element,
which determines the guest’s attitude towards hotel, which
ultimately affects the profitability. Hotel industry is very much a
“people-industry” which produces intangibles. The service aspect
particularly personalised services cannot be mechanised or
automated. Quality, care, facilities are very vital than the quantity
or numbers. The profitability of hoteliering firms largely impinge
on the amenities and quality of its services, which is the crucial
determinant of the volume of sales. If a hotel organisation aims
to seek out a specific portion of the guest market and to maintain
a high occupancy level, then it must pay close attentions to
modifying the products and improves the quality of services it
offers . In this chapter an attempt has been made to apply the
service quality model in order to examine the gaps in services
of the hoteliering establishments. It is tried to unravel the
mysteries of why some firms are successful and others are not.
Hopefully the issues raised here will stimulate the interest of
both operators and researcher concerned in this type of tertiary
activity.

The technology of most service organisations especially in
hotel concerns, is conceived as “knowledge technology”, as
opposed to manufacturing technology where output quality is
physically measured. In this regard service technologies tend
to consist of the ideas, goals and rationale for the methods
adopted. Furthermore services do not tend themselves to
physical controls relating to quality factor and therefore should
rely on intangible process of controlling . In addition to produce
the hotel services, the customers and the service worker must
interact. This interaction process can be seen as a situation
where workers not only produce the output but are simultaneously
involved in delivering it as well.

The hospitality industry seems to be a relatively successful
one, although in many developed countries the boom in tourism
and the hotel business is over. Especially in the coming decades

Salient Features of Management 139

it will be necessary for the industry to emphasise quality not
merely quantity. The hotel industry in developing countries should
actively market its product. Marketing its product is simply attuning
the hospitality offer to the wishes and expectations of the potential
demanding consumer of hospitality. This marketing process can
only be executed if one knows the needs and expectation of
the guests and what can be offered. The principal factor that
determines the guest’s attitude towards a hotel is the quality of
service received. Automation and mechanisation has helped in
ruling out the human element in a number of industries but the
human element is the determining element of the hotel business.

The architecture of a hotel, the decoration of the lobby the
furnishings of a room are examples of hotel attributes that may
be the reason behind a benefit, or tangible surrogates for
intangible benefits, but they are not the benefits. The benefit is
what they do for the consumer e.g. gives a sense of security,
a sensation of prestige, or a feeling of comfort. And the credibility
of these benefits tends to diminish rapidly if an expectation is
not fulfilled. Decor is soon forgotten, if a room service takes an
hour or so. A sense of security is not credible if slovenly characters
are seen in the lobby or met on the elevator. It is this fulfilments
of expectations, or lack of it, that creates the perception of
deliverability for the consumer. The competing hotels may be
seen as providing the same sense of security, grandeur, prestige
and comfort. The tangible surrogates attributes their ability, to
differentiate and at the same time, are no longer deterministic
in the consumers choice of a hotel.

The definition and measurement of quality is no small matter
for the growth and performance of hoteliering firms. These
factors have been found to be particularly elusive with regard
to services and almost undefinable at least in consistent terms,
in regard to hotel services . If quality per se is ‘elusive and
indistinct’ and often mistaken for impressive adjectives and not
easily articulated by consumers then added intangibility of
services certainly compounds the difficulty of definition and

140 Principles of Hotel Management

measurement. Yet as quality measurement and improvement
has become so vital to managers and marketeers of the hotel
services, and when, as has been pointed out, quality is the
single most important consumer trend of the coming decades
then it becomes imperative, both theoretically and empirically
to analyse the factors and suggest measures to improve the
quality of hotel services.

The search for quality trend has prompted some researchers
to begin to develop various definitions of service quality models.
A basic consistency and consensus seems apparent among
these numerous studies. Essentially concerns rests on largely
abstract dimensions, such as perception, expectations and
satisfaction. This communality leaves apparent need, at least
at this stage, to debate over such a framework. Rather it gives
an opportunity to test these dimensions and to seek empirical
confirmation.

Empirical verification of abstractions, however is no less
elusive than the definition of quality itself. It seems, in fact, that
the frustrating attempts at definition may be preventing, rather
than facilitating, successful efforts towards empirical confirmation.
But the difference between the abstractions can be measured.
For example if quality is measured vis-a-vis expectations, and
perception is the level of satisfaction derived, then it seems only
logical that if the difference between the two can be measured
then not a definition of quality, but a measurement of its existence
or non-existence can be obtained.

This measurement in fact may just, be a more significant
marketing tool. It also has the advantage of being somewhat
less of an abstraction, although not totally, to deal with, and this
considerably eases the task. Many research investigators , have
termed these differences between abstractions as gaps. Others
have referred to the measurements of these differences as
‘disparity analysis’. The analysis presented here is based on the
service quality model . After a brief review of the conceptual

Salient Features of Management 141

foundations of the exercise, the findings from the present study
of gap analysis in hotel services are presented.

UPKEEP OF QUALITY

A concept called “missing service quality” was developed
by Gronrops in his model. His model is based largely on the
construct “image” which represents perceived service quality
which in turn represents the ‘gap’ between ‘expected services’
and ‘perceived services’. He explores the use of the term quality
as if it were a variable itself rather than a function of a range
of resources and activities. He argues that this range includes
what customers are looking for, what they are evaluating, how
service quality is perceived, and in what way service quality is
influenced. ‘Perceived quality’ of service is dependent on two
variables—expected service and perceived service. Service
quality can have two dimensions:

(i) Technical quality

(ii) Functional quality

Technical quality lends itself to somewhat objective
measurement by the consumer. It is what the consumer receives
as a result of his interactions with a service firm. This could be
a hotel, a room, a bed, a restaurant meal, or a doctors
prescription. Functional quality on the contrary, represents the
service process or the expressive performance of the service.
This quality is perceived by the customer in a very subjective
manner. Together, the technical quality and functional quality of
the service represents a bundle of service dimensions and
create an “image”, a third quality dimension.

The “image” influence the consumer’s expectations. In fact
image is a quality dimension overriding substandard technical
and functional quality delivery. It is interpreted to mean that the
consumers may be satisfied in spite of some deficiency in
technical and functional quality in the service. Conversely, the
consumers may be satisfied inspite of their presence. It is very

142 Principles of Hotel Management

difficult to measure the ‘image’. However, ‘satisfaction of
consumers’ can be measured as a surrogate for ‘image’. It is
a reasonable assumption if there is a disparity between
satisfaction and technical and functional delivery of services.

HOW TO IMPLEMENT?

Thus it seems that, measuring service quality per se is not
the purpose, but rather the quality in the delivery of the service
is at least two and very possibly three dimensions described
below. It appears at first glance to be a fine distinction but infact
it is very important one because it eases the task considerably.
The elusive quality now becomes a some what less elusive
delivery, perhaps still intangible but less abstract.

Services in the hospitality industry are classified along three
different dimensions .

(a) Person related services

(b) Product related services

(c) Information related services.

It is contended that although the hotel industry provides a
number of product related services e.g. car parking, laundry
etc., and information related services e.g. television and radio,
more importantly it provides person-related services such as
rooms and meals for individuals. Person-related services are
geared towards the main objective of bringing about some
change of state in the customer, or to maintain an existing state,
which for one reason or other he is unable to do for himself or
chooses not to maintain the existing state. Accordingly a hotel
provides rest, recreation and refreshment. Consumption of
persons related services generally involves four elements:

(i) direct consumption of physical goods (such as food,
drinks etc).

(ii) use of physical facilities (such as buildings and furnitures
etc).

Salient Features of Management 143

(iii) interaction with persons providing the services.

(iv) information about the services.

The main characteristic is that the provider and consumer
are inextricably involved in the process of delivering the services.
Indeed the process is frequently as much a part of the service
as its outcome.

There is a similar way of defining the quality of services.
There are two meanings of the term “quality”. The first relates
to the particular attributes, which serve to define the nature of
the service. The second usage refers to a qualifier in measuring
such an attribute. The two meanings combined together gives
a particular value or level of service characteristic. As an
illustration it means that the menu is an attribute of a restaurant
meal but the choice of menu is a qualifier, wider choice of menu
is a service characteristic.

So service quality per se is so confounded in many cases
that it is extremely difficult if not impossible to measure. The
consumer of a particular service seeks to satisfy a somewhat
hierarchical set of needs and wants partly related to the essential
service and partly to subsidiary attributes. An essential purpose
might be an overnight stay in a hotel. Subsidiary attributes may
include accessibility, convenience of location, availability, timing
and flexibility as well as interaction with those providing these
service and with other customers. Customers always have the
expectations as to now all these needs be met, which are in
themselves rather hazy and imprecise.

When presented with the actual offering of these multiple
variables, the consumers from an impression which is almost
immediately compared with expectations and the resultant level
of satisfaction is determined. Each customer regards various
service attributes as more or less important and various service
characteristics as more or less desirable. All together the
consumer obtains a service experienced comprised of multitude
of service transactions which he selects from an offering. Each

144 Principles of Hotel Management

transaction contributes to the service experience and has
characteristics relating to the whole set of transactions which
is more than the sum of the individual elements, which creates
an ‘overall feeling’ or ‘image’ about the firm.

There exists a considerable amount of difference in
perceptions between customers and providers, usually which
comes as a surprise to the management of the hotel concerned.
There are various evidences that management perception of
quality of service frequently differs from the perception of
customers, colleagues and hotel staff even. This difference in
perception is termed as ‘service gap’. Here an attempt has been
made to undertake an exploratory qualitative study investigate
the concept of service quality. Four different categories are
investigated to gain an insight into:

(i) What managers perceive to be the key attribute of
service quality?

(ii) What customers perceive to be the key attributes?

(iii) Whether discrepancies exist between these two
perception?

(iv) Whether these results can be utilised to establish a
general model to more efficiently explain service quality
from consumers’ stand point?

The upper managerial personnel of 18 hoteliering firms, six
hotels each from the High spending hotels, medium spending
hotel and low spending hotels existing in the cities of Orissa are
surveyed as to what they believe their customers expectations
in selecting a hotel, their perception of their own hotels service
delivery, what customers particularly like and dislike about their
hotel and the overall fulfilments of expectations and satisfaction
with their hotel in the view of customers who had spent nights
there. The same questions are asked at 200 randomly selected
customers staying in those hotels over a period of two weeks,
during the month of January 1990. Out of 200 customers 93
were foreign tourists.

Salient Features of Management 145

Both management and customers are asked to evaluate
sixteen attributes on a 1-5 scale where 5 represents the highest
rating. T - tests are used between each pair of attributes that
represented a potential for service quality gaps. Mean score
and significance levels are represented in data.

Four types of gaps are found as shown in the data.

l1 (= a1a4) represents the gap between management’s perception
of consumers expectations (a1) and consumers’ expectations
(a4). l (= a3a4) represents the gap between consumer’s perceived
service (a3) and consumer’s expectation (a4). l3 ( = a2 a4)
represents gap between management’s perception of hotel

service delivery (a2) and consumer’s perceived service (a3).
l4 (= a2a4) represents management’s perception of hotel service
delivery (a ) and consumer’s expectations (a ). Lastly l (a a )

2 4 5 12

represents the gap between management’s perception of

consumer’s expectation (a1) and management’s perception of
its service delivery (a2). A service quality model has been
developed here. The gaps levelled in these five propositions

have definite impact on the consumers rating of service quality.

It is the gap between management perceptions of guest
expectations and the expectation of the guests to determine if
management actually knows what its guests expect. The survey
reveals that for the most part management believes that guests
expect more than the guests themselves expect. In the 10 cases
where the gap is significant at (< 0.10), guest expectations are
higher than that of management only in 5 cases. Three of these
five cases, however is considered extremely critical ones where
management does not realise their importance: size of room
(< 0.01), eating/drinking options (< 0.01) and shops in hotel
(< 0.05). It is to be noted that all the five critical areas are clearly
intangible functional qualities. These five areas also show up
repeatedly in the survey as high in the list of features that
travellers, particularly the foreign tourists look for in a hotel
which encourage them to return. It should also be noted that
many of the attributes which management perceives as eliciting

146 Principles of Hotel Management

higher consumer expectations are tangible technical qualities
in character.

It is the gap between consumer expectations and their
perceptions of services received effectually, i.e. what they actually
get. In this case the respondents expectations exceed on 5 out
of 9 attributes at a significance level (<0.10). They are not
exceeded, however on attribute 5, 8, and 14, all at (< 0.05)
significance. All these are critical attributes which primarily
constitute the intangible functional qualities.

It measures the difference between consumers perception
of delivery and what management believes they deliver i.e.
managements success in carrying out what they perceive to be
customer’s expectation. It is not too surprising to learn that
management perceives their service delivery as being more
successful than customers perceive it to be in all cases, 9 out
of 16 attributes at (< 0.10) significance level. It implies therefore
that the management of the high spending group and medium
spending group hotels are very self-assured and complacent
and very oblivious of their failings.

A subjective assessment of gap (X3) is also done.
Respondents of both the samples are asked open ended
questions such as what do you (people) find particularly satisfying
and dissatisfying about the hotel, where they stay. As multiple
responses are permitted there is no significance test. However
the most frequent responses and their percentages of total
responses are shown in data. These findings show that the
intangible are not as outstanding at the high spending group
hotels as the management believes them to be. They also show
that it is the intangibles at the HSG hotels which upset customers
more and not the technical qualities which the management
believes are upsetting.

It reflects a comparison of managements delivery to
consumers expectations. The service gap pattern of A3 prevails
here. Management perceives their services delivery as lower

Salient Features of Management 147

than customers expectation in only three cases. In only two of
these, cleanliness and food quality are the difference is significant
at (< 0.01) level. This clearly indicates a very high expectation
of guests in these areas.

It measures an internal situation: Does management believe
they deliver as much as they believe customers expect? In this
case they clearly do believe it, with no significant exceptions.

The respondents of both the sample are asked to indicate
on a 1-5 scale, whether the hotel experience is satisfying to
them. Whether it meets their expectations. Customers, are asked
to rate the hotel in terms of its overall ‘image’ or quality. The
data shows that management once again believes that it is
doing a better job of meeting customers expectations and
satisfaction than the customers actually feel. It clearly indicates
a major gap in service quality of sample hotels. The quality
rating by the customers is good in case of H.S.G. hotels but
in case of M.S.G. Hotels it is worse and it does indicate a real
Jack of service quality. There is no reason for complacency from
the management’s point of view. The customers of HSG hotels
are not really dissatisfied with its services they are less vulnerable
to competition in the hotel industry of the state especially in the
event of new constructions in a nearby location of the same city.
On the contrary the customers are not really satisfied with the
service quality of both MSG Hotels, LSG and which are highly
susceptible to competitive threats of rival firms, operating in the
same locality or cluster.

Quality of services itself largely depends upon the good and
effective management. Management should not be centralised
or departmentalised in the same way as other tertiary activities.
It is supposed to be variable and flexible. It should relate to all
activities and be undertaken at all levels of the organisation. It
is essentially an integrating process. And hotel industry is very
much a people-industry with humane elements. Many customers
need to have direct access and interaction with the working